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Inventory Management, Just-In-Time, and...
Multiple Choice

These Multiple Choice questions are designed to help determine how well you have mastered the text material. Try to answer all of these questions without using your text or the Review Points. Instant feedback and coaching for incorrect answers is provided when you complete the quiz and submit answers for grading.

For additional study questions and more practice exercises, see the Student Guide and Review Manual (ISBN 013-039144-1). To order a copy for all chapters of Cost Accounting, Third Canadian Edition, please contact your Pearson Education Canada sale representative.

Select the best answer to each question.

1 .       (CPA) Barter Corporation has been buying Product A in lots of 1,200 units, a four months' supply. The cost per unit is $100; the ordering cost is $200 per purchase order; and the annual inventory carrying cost for one unit is $25. Assume the units are required evenly throughout the year. The EOQ is: 

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3 .       (CPA adapted) A manufacturer expects to produce 200,000 widgets during the fiscal year ending June 30, 2003, to supply the demand that is uniform throughout the year. The setup cost for each production run of widgets are $144. The cost of carrying one widget in inventory is $0.20 per year. After a batch of widgets is produced and placed in inventory, it is sold at a uniform rate and inventory reaches zero when the next batch of widgets is completed. The quantity of widgets (rounded to the nearest one hundred widgets) that would be produced in each run in fiscal year 2003 to minimize total annual relevant setup and carrying costs is:  

4 .       (CPA) For its EOQ model, a company has ordering cost per purchase order of $10, and annual cost of carrying one unit in stock of $2. If the ordering cost per purchase order increases by 20%, and the annual cost of carrying one unit in stock increases by 25%, while all other considerations remain constant, EOQ: 

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